Bluestem Prairie

MF Global update: the Pioneer Press digs up the deets on rural shockwave from distant scandal

On Saturday, Bluestem asked a few questions in How will MF Global brokerage collapse affect Minnesota's farmers and cooperatives?

Yesterday, Tom Weber at the Pioneer Press reported some answers in MF Global fallout hits grain elevators:

The collapse of MF Global is sending shockwaves across rural Minnesota, where grain elevators and some farmers are stunned to find their commodity accounts threatened by the distant scandal.

Although relatively few Minnesotans directly used the trading services of MF Global, the failed derivatives broker played a larger behind-the-scenes role in commodities futures trading. That has spread the fallout from the collapse, and some Minnesotans are alarmed to find a portion of their commodity accounts have been frozen - and seem to be at risk.

"Minnesota's farmers, co-ops and grain elevators trusted this company with their accounts, and it appears that their money was mismanaged and possibly lost," said Democratic U.S. Sen. Al Franken.

In a letter to federal regulators, Franken said Minnesota elevators are worried that those losses "could put them out of business" and that any "large loss of equity for grain elevators would have cascading effects on rural Minnesota's economy, affecting everyone from large cooperatives to small farmers."

Fortunately, Bob Zelenka, executive director of Minnesota Grain and Feed Association, reports that 86% of the money in commodity accounts has been released, although the Pioneer Press reports that he still has plenty of worries.

Read the entire article at the Pioneer Press.

Image: The Octopus from 1882.

How will MF Global brokerage collapse affect Minnesota's farmers and cooperatives?

Update: After checking out this post, a reader involved in agriculture called to share this "Hog Blog" video in which AgStar’s Steve Malakowsky discusses MF Global's bankruptcy filing [Youtube here]. One can infer that swine producers used MF Global and Malakowsky, Agstar's Vice President of Agri-Business Capital,lays out the process for swine producers to move to other brokers. [end update]

A reader suggested that Bluestem look into what the impact of the meltdown of MF Global might be on Minnesota's rural economy. I haven't come up with a definitive answer to this question, but perhaps the business press will look into it.

Here's what I've found so far. Apparently the mega-brokerage not only made a losing bet on European bonds. Client funds are also still missing, the Wall Street Journal reports today. Hundreds of millions.

What does this have to do with farmers and grain elevators? Unfortunately, too much. MF Global not only traded in dubious European bond debt, but in the grain industry as well. MF Global Inc. is a now-suspended clearing member of the MGEX (the Minneapolis Grain Exchange). The MGEX  home page announces the suspension of the firm's trading and clearing privileges, and the transfer of customer accounts to other firms.

At the Progressive Farmer's Market Matters blog, DTN Markets editor Linda Smith writes in Another Financial Meltdown:

MF Global is/was one of the world's biggest brokers for commodities and listed derivatives, providing access to more than 70 exchanges globally as well as over-the-counter products . . .

Funds are transferred hither and yon among this myriad of firms as one finances another.

- These transfers appear to include use of clients' funds rather than keeping them whole and segregated, which currently is legal -- except that it appears upwards of $1 billion is unaccounted for. It is ironic that the Commodity Futures Trading Commission had proposed a rule under Dodd-Frank to not allow using customer funds for its own use, but it was shelved when several companies including Mf Global, requested additional comment time.

Lovely. Perhaps Mike Parry will dig deep within himsef and defend this lack of regulation. Moving on:

The list of the 50 largest nonsecured creditors doesn't include commodity companies, grain elevators or other ag-related companies. But "there will be HUGE ripple effect as folks realize what this really means," said one grain industry source who cleared trades through MF Global and has spent the week shifting accounts to one of the other clearing firms (ABN, Amro Chicago Clearing, ADM Investor Services, Dorman Trading, FC Stone, R.J. O'Brien, Rosenthal Collins Group) and handling the paperwork.

According to Reuters, 50,000 customers have had to move accounts -- and only 60% of the account funds will move with them, so these firms and individuals will have to come up with the balance to keep their margin funds current. Those who can't may be forced to liquidate their positions.

That's right: a 40% immediate loss. While big firms like one privately-held commodity behemoth my source mentioned is rumored to have used MF Global extensively have plenty of cash reserves, individual farmers and small town cooperative elevators working a hedge are not so lucky.

There's nothing publishedthat I can find about Minnesota firms or farmers, but we know MF Global had a seat on the grain exchange, so it's likely some folks in the state are caught up in the aftershocks of this market-rattling event. The Wall Street Journal provides a timeline of the firm's evolution here.

Some scattered sources do suggest that there might be trouble. Reuters reports from our southern neighbors in Iowa farmers feel ripples of MF Global bankruptcy:

MF Global Holdings Ltd's bankruptcy has sent shockwaves through a little Iowa town, where a local broker said he felt a moral obligation to guarantee more than $1 million in funds he placed for farmers at the futures brokerage.

Ken Ries, the 62-year-old owner of Ries Ag Marketing, has been clearing through MF Global and Refco since opening his commodity brokerage and grain dealer in 1987.

In an interview from his home in the farmland outside of Ryan, Iowa, Ries said he might wind up covering client funds -- all from farmers in eastern Iowa -- that have not yet been accounted for. MF Global and its regulators are searching for some $600 million worth of funds that went missing in the chaos of its bankruptcy this week. . .

Reis said calls to MF Global offices have mostly been met by busy signals. When he reached representatives on the phone, they were unable to provide him with any concrete information on when his clients' money would be available.

The bankrupt brokerage, however, transferred 58 percent of his clients' accounts to a new clearing firm, ADM Investor Services, on Friday. Ries is hoping accounts that have cash but no open trades will be transferred over the weekend. . . .

And there's more here at AgWeb's Latest News on the MF Global Bankruptcy Filing. Two podcasts predict a rough row to hoe. Jerry Meyer says MF Global Funds Release, Don't Expect It to be Easy. And Jerry Gulke explains What Happens Now as MF Global Funds Transfer. It's not pretty and Gulke warns that if there are any surprises in Wednesday's release of the World Agricultural Supply and Demand Estimate by the USDA, the grain markets and farmers could be in for a rough ride.

Perhaps more solid news on this development in Minnesota rural economy--prompted by wheeilng and dealing far from the windswept praire and sunny small towns--will emerge in the state's media. Bluestem will keep it's reading glasses on and report back as news develops.

Image: From 1882, the Octopus as a symbol of corporate greed.

Union, American Crystal Sugar to head back to the bargaining table on October 24

The Fargo Forum reported on Saturday that American Crystal, union to go back to negotiating table:

Negotiators representing American Crystal Sugar Co. and the company’s approximately 1,300 locked-out union workers have been called back to the negotiating table by the U.S. Federal Mediation and Conciliation Service.

Mediated talks between representatives for the nation’s largest sugar beet producer and the union will be held at an undisclosed time and location Oct. 24.

Union representatives said they had planned to contact Jeanne Frank, the federal mediator assigned to the case, this week to request another negotiating session. But according to local union officials, the mediator contacted the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and the company Monday to schedule another round of negotiations, before the union contacted her.

With the lockout dragging on for more than 75 days, impacting productivity and efficiency at company plants and leaving union workers and their families without paychecks, both sides say they hope for a resolution to a costly labor impasse that has impacted local economies and divided communities and households. . . .

Read the rest at the Forum. The Grand Forks Herald takes a look at Drayton, ND, the smallest town with a ACS refinery in Main Street locked out by lockout:

KodaBank on Main Street has been busy refinancing car loans for locked-out union workers at American Crystal Sugar.

Bank President Pete Anderson anticipates he soon will see customers seeking restructuring of home mortgages, too.

“After 90 days without work, there will be some real hardships,” he said.

That’s especially true for workers at the Drayton and Hillsboro processing plants because North Dakota doesn’t award unemployment benefits as Minnesota does. Drayton likely is the hardest hit community proportionally of the five Red River Valley plant sites because its population of 800 is the smallest, about half of Hillsboro’s.

But the 53-year-old Anderson, raised in Drayton and a starting guard for the high school’s last appearance in the state Class B boys basketball tournament, sees a greater harm than lost wages and lower beet payments to growers.

“I’ve never seen anything here that has impacted relationships more than this has,” he said. “Some of these relationships may never be mended.”. .  .

It's not surprising that a community banker might value those relationships. Elsewhere in the Herald, business columnist Ralph Kingsbury observes the consequences of only valuing "comparative advantage" in North Dakota won’t be immune from globalization’s woes:

Globalization. That’s the way they describe it now. When the trend first started, it was called free trade. We were told — and most of us believed — that if only we would let production take place in countries with the greatest “comparative advantage,” we would all be better off. . . .

Globalization has not lived up to its promises. We all know the economies of the world are in precarious shape at best. Read what economists have to say about the problems we face today, and compare their thoughts to those of economists from earlier generations. It’s obvious that today’s economists don’t understand what they have created any better than did the economists at the beginning of the 1900s.

They really don’t seem to understand how to create or sustain demand — and demand is what it’s all about.

It is too early to tell if the anti-Wall Street demonstrations of the past few weeks have depth or staying power. But we can say that the demonstrators are there because of the failures of globalization.

One thing different this time is that many of the people demonstrating are college graduates. Many of them are not getting jobs because they have degrees in areas where the economy finds no value (or at least enough value for the number of graduates).

After all, how many masters of mass communications does an economy need?

How do we as Americans measure success? Certainly many in North Dakota have enjoyed success. But how can we look at the rest of the country and say not only, “We are OK,” but also “We will be all right”?

It's interesting to watch the growing meme that blames college graduate for picking "wrong" degrees for unemployment, rather than holding accountable those who made decisions in the financial sector. It's a blame-the-22-year-olds world. Bluestem suspects this line may become even more popular among our ALEC-fatten politicians than blaming the poor for the follies of the wealthy.

Photo: Locked out workers and vans carrying scabs.

DLOnline shares a modest proposal for jump starting economy: raise employees' salaries

Across America, the other ninety-nine percent of us who aren't reaping huge financial benefits from the current economic arrangements are wondering publicly what it's going to take to get those job creators to use the tax breaks they enjoy to--well--create some jobs.

The editors of the DLOnline came up with a suggestion the other day in Here’s a way to juice economy:

Here’s a radical idea — instead on waiting for Uncle Sam to ride to the rescue, American private enterprise could help jump-start the economy itself.

Large companies are sitting on a mountain of cash. According to USA Today, non-financial companies in the S&P 500 stock index have $963 billion in cash.

They should give their employees across-the-board 10 percent salary increases. That would go a long ways towards helping the average worker regain the spending power they had in 2008, before the great recession resulted in several years of frozen wages. . .

. . .Average wages, adjusted for inflation, have fallen, while employees have to pay an increasing portion of their health care and retirement costs. The upshot, according to USA Today, is that workers have less money to spend.

One wonders why those like Gretchen Hoffman who supposedly favor private sector solutions haven't thought of this one. Instead, she rants about how the public sector needs to cut wages and benefits because the job creators are paying less, and that locked out sugar workers should just take their lumps.

Maybe putting some of those bargeloads of cash into employees' pockets instead of crying poor mouth all the time might do the trick.

Hanging on to those dollars like those poor souls profiled on Hoarders because someday, some way, the cash might be used to create jobs illustrates the problem with hoarding outlined in the popular show's opening credits:

Compulsive hoarding is a mental disorder marked by an obsessive need to acquire and keep things...

Photo: Too much to stash in a mattress.

Immigrants for Sale: Will Appleton's shuttered private prison open in human trafficking scheme?

Yesterday at the Minnesota Independent, editor Jon Collins broke the news that the Corrections Corporation of America's private prison in Appleton, shuttered for want of business from the state of Minnesota, may reopen.

In Private prison company’s growth went hand-in-hand with political influence, Collins reports:

It’s been almost two years since the privately-run prison in Appleton has held prisoners. But in early 2012, the prison’s owner, Corrections Corporation of America (CCA), expects to fill Appleton’s Prairie Correctional Facility and another facility in Colorado with 3,256 inmates from California.

In the last ten years, the revenue of CCA, the country’s biggest private prison company, has almost doubled, according to their annual reports. Critics say that CCA’s success, and even the likely reopening of the prison in Appleton, stems from their use of lobbying and campaign donations to push through tougher crime laws and increase detainment of illegal immigrants.

“Prison privatization contracts are designed by policy makers. It’s important for these companies to have a political strategy to increase their market share,” Paul Ashton, author of a recent report on private prisons for the Justice Policy Institute, said in a conference call Wednesday. Private prison companies “game the system,” he said, by pushing to increase market share, which in the private prison business means putting more people in prison.

The Appleton facility is in DFLer Andrew Falk's House district and Gary Kubly's Senate District. When the state began transferring inmates from the private Prairie Correctional Facility to the less-costly public facility in Faribault, the Morris Sun reported that both legislators went to bat for the jobs the corporation provided:

“Devastating’’ is how Appleton Mayor Ron Ronning, himself an employee of the private prison, described the consequences to his community should the facility be closed or mothballed. The mayor was among well over 120 people, most of them employees of the facility, who packed the Appleton Civic Center on Friday morning for a town meeting hosted by State Sen. Gary Kubly, DFL-Granite Falls, and State Rep. Andrew Falk, DFL-Murdock.

Mayor Ronning said he feared that Appleton and the surrounding rural area could see a major exodus of jobs and suffer the economic strife that gripped it during the farm crisis of the 1980s, when businesses shuttered their windows and homes were left vacant.

The 1,600-bed Appleton facility is currently housing 542 inmates from Minnesota and another 525 from the state of Washington, according to Tim Wengler, its warden. The state of Washington has been slowly reducing its number of inmates.

So what's the problem with re-opening the prison and putting people in Appleton back to work? Back to the Collins' report. Go read about the influence of private money on public justice. And there's also this:

One thousand seven hundred fifty miles from L.A. to Appleton
CCA and other private prison companies are doing very well. In 2010, CCA saw total revenue of $1.67 billion, according to CCA’s annual report. But there is a human cost to the industry too.

Amy Gottlieb of the American Friends Service Committee told the Minnesota Independent that prisoners transferred to other states often face both emotional and legal hurdles.

“Ultimately, we have thousands and thousands and thousands of people around the country who are being locked up, held away from their families, in the immigration context are often unrepresented by council,” Gottlieb said. “People are profiting off of that.”

According to CCA’s website, one of the benefits of out-of-state inmate management is that the company will “[a]dhere to state-specific policies and procedures, as well as hundreds of standards set by the American Correctional Association and our company.”

But the fact that prisoners, including detained immigrants in some federal facilities, are being held in the less accountable private facilities is of concern to advocates like Gottlieb.

“We have seen over and over again that the private prison lobby is extremely powerful and they have deep connections to a lot of politicians and get a lot of federal contracts,” Gottlieb said. “That creates very serious concerns when what we are really talking about here are human rights and human rights violations.”

The Cuentame community told the story via the powerful video, "Immigrants for Sale":

I've praised both Kubly and Falk in the past on Bluestem, but won't hesitate to cry foul if either cheers this development by CCA.  Opening the prison for detainees would only feed the human supply chain for private profit that was at the core of SB1070--and copycat bills like ALEC zombie legislator Steve Drazkowski's own HB3830.

Rural Minnesota needs jobs, but profiting from human trafficking isn't the way to do it.

Update: Roy Pratt at City Pages reports Prairie Correctional Facility, private prison, not re-opening soon, says Rep. Andrew Falk.

Note: Currently in Minnesota, ICE detainees are held in county jails that the Department of Homeland Security contracts with for detention services.

Image: via Cuentame.

Bluestem remix: Chip Cravaack driving America over a cliff. . .now in New Hampshire

The SEIU MN State Council's Executive Director director sent Bluestem a press release and a URL of a Youtube for an ad the national union and Americans United for Change are running in Minnesota's Eighth Congressional District.

Looking at the ad, something seemed a little off. Congressman Cravaack is moving his family to New Hampshire, as Bluestem noted on Saturday in Teabagger turns carpetbagger: left off Patriot Program, Cravaack moves family to NH. The ad uses stock footage of a race down a coastal road in what looks to be California (and the union and AUC are running similar ads in targeted districts across the country).

Why not a cliff in New Hampshire?

Bluestem remixed the sound with more appropriate footage and some subtitles to provide a multi-level message:

Here's the original, with the press release below the fold:

Modest proposal: let's embrace Representative Kiffmeyer's sociological insights in MN's budget

Minnesota's liberal-to-progressive blogosphere was aghast today at reading a comment made by Representative Mary Kiffmeyer (R- Smallpond) in the St. Cloud Times:

But Kiffmeyer is skeptical about Dayton’s push for revenue; she believes it’s motivated chiefly by Dayton’s desire to hike taxes on the wealthy.

“It’s not about revenue,” Kiffmeyer said. “It’s about a tax increase, because they want to go after those who’ve actually worked hard.”

Typical of the reaction is my friend Jacop Grippen's earnest and articulate statement  On Behalf of the Non-Millionaires Who Work Hard:

So, apparently if you make less than a million dollars you don't work hard, and haven't worked hard.

Mrs. Kiffmeyer, how many millionaire teachers do you know? Police officers? Fire fighters?  Cashiers? Servers, well, they do get upwards of $100,000, I suppose. Assembly line workers? Nurses?  Executive Assistants? Day Care Providers? Temporarily laid off State Employees?  State Representatives and State Senators? (did you mean to inadvertently insult your colleagues?) You get the point.

Eric Austin at Outstate Politics also feels slighted in Dear Middle Class Minnesota, Here Is What Republicans Think Of You…:

Did you catch that? Kiffmeyer let slip just what Republicans think about poor and working class Minnesotans. They haven’t “actually worked hard” or else they too would be wealthy, right? So as we debate blame and budgets remember that the reason Republicans stand on the side of millionaires is they believe they are better than poor and working class Minnesotans. It isn’t something they usually let slip but if you listen and watch long enough they will let you know just what they think of you.

Rather than umbrage and hurt feelings, Bluestem offers a modest solution for working and middle class people. 

In light of the higher burden expected of them by Republicans like Kiffmeyer--under that presumption of sloth--let the North Star's tillers of the soil, hewers of wood, drawers of water, teachers of youth and all others--live up to Representative Kiffmeyer's expectations.

Keep her happy, if that's possible, and stop working so hard. No fair challenging that worldview, and you're picking up the tab already. Relax. Meanwhile, in light of Kiffmeyer's high opinion of the work ethic of the wealthy, Bluestem anticipates all of those in the upper tax brackets to pitch in and lift a little slack in exchange for not paying their fair share.

We hear that trees toppled several state parks in Friday's storm need to be cleared from roads and campgrounds. Grab your chain saw and head to Marshall. After all, no less of a figure in state's "no tax" movement than Margaret Martin, writing for the Minnesota Free Market Institute, in her Snapshot of Private Flood Relief, suggested after the Southeast Minnesota floods of 2007 that private giving would be enough:

When disasters happen, government help is needed to strengthen and rebuild civil authority and but the recovery and rebuilding process is best accomplished when private individuals come to support the efforts of those in need, to help get their lives and their livelihoods back on track.

Bluestem agrees whole-heartedly: chop some wood, 'twill do you good, as the cherished old folk song goes.

But even back then, that sourpuss progressive Charlie Quimby had to disagree, in No Tooth Fairy: Private Giving is Good, But No Way to Run the State.  There's always one in a crowd, suggesting reasonableness, using actual studies rather than business folktales about high filer tax refugees, and bridging the great divide with civility. Dang it anyway.

Photo: A locked and loaded Mary Kiffmeyer should make those peasants work harder.

Related posts: 105 sex-crazed Republicans close down Minnesota

Suddenly socialist Mike Parry demands pay according to his needs

Gruenhagen gone wild: Glenn offers summer fiction pick to constituents

Unlike Gretchen Hoffman and her intern, I didn't attend colleges where professors said money was bad. Hence, I'm happy when people are able to pay me for writing; one of my freelance posts has appeared at the Minnesota Independent, Gruenhagen recommends questionable story on tax hike refugees to constituents:

Minnesota Representative Glenn Gruenhagen sent his constituents his weekly email newsletter Tuesday, cautioning them to purchase fishing licenses  now in advance of the looming likelihood of  a state government shutdown.

However, the Sibley County legislator was not content to leave it at that practical level, and concluded with a recommendation for a little summer reading:

I still hope we can find a breakthrough with the budget in time to avert a shutdown and I will keep you posted as things develop. I did come across an interesting Wall Street Journal article that shows how Gov. Dayton’s “tax the rich” plan has backfired elsewhere. Here is the link: http://online.wsj.com/article/SB124329282377252471.html.

The URL links to a May 2009 Wall Street Journal article, “Millionaires Go Missing: Maryland’s fleeced taxpayers fight back.”

However, his constituents may wish to consider whether the reading is beach-ready as commentary or as fiction.  Though the Wall Street Journal article is an article of faith among those advocating an anti-tax-the-rich agenda,  the liberal-leaning Institute on Taxation and Economic Policy suggested in 2009 that the millionaires hadn’t moved to a new state, but rather to a different tax bracket...

Read the whole thing over at MNIndy. And check out the articles.

For reading at the beach (if it's open) this weekend, Bluestem recommends Middlemarch, Stars in My Pocket Like Grains of Sand, or anything by the late Bruce Chatwin. Much more fun than the Journal's staid economic fictions. Tell not a half-truth, but a truth and a half.

Walz to host budget town halls in Rochester and Winona

Congressman Tim Walz asks southern Minnesotans to join him in Rochester and Winona on Monday, June 27th for town halls on the federal deficit.

The Winona Daily News reports in Help Walz tame the budget at town hall:

U.S. Rep. Tim Walz, D-Minn., will host a town hall meeting Monday in Winona with the hope that some locals can offer a few ideas to help elected officials in Washington, D.C., find ways to reduce the national deficit.

Walz will be joined by Sara Imhof, a representative from the Concord Coalition, a nonpartisan organization that aims to educate citizens on issues surrounding federal budget deficits.

Imhof will lead attendees in a workshop that will give them a chance to discuss the current deficit in small groups and come up with potential solutions to present to Walz.

The idea behind Monday's workshop isn't necessarily that a small group of Winonans will singlehandedly balance the country's budget. Rather, it's a creative way for constituents to offer Walz feedback.

Update: The Rochester Post Bulletin has now posted info about the  early afternonn  town hall in the Med City : Walz to hold deficit town hall meetings Monday. [end update]

Deets from the press release:

RSVP appreciated by phone at 507-206-0643 or at www.walz.house.gov.

These town halls are open to the press and public. A representative from the non-partisan fiscal-watchdog group the Concord Coalition will be on hand to work with participants during the hands-on budgeting activity.

Monday, June 27th

12:30-2:30pm
Rochester Community and Technical College
3rd Floor College Center (CC 300)
851 30th Ave SE
Rochester, MN 55904-4999

5:30-7:30pm
Winona State University
Kryzsko Commons, East Hall
Huff & 10th Streets
Winona, Minnesota

Whatever the game may be, Parry borrows tax refugee fear talk from Glencoe Glenn Gruenhagen

Back in May, Bluestem caught Glenn Gruenhagen going wild with some talk about tax refugees when it posted Glenn gone wild: Gruenhagen's baseless talking point about tax refugees fleeing OR & MD.

Today, I opened the online version of the Austin Herald to discover that Suddenly Socialist Mike "I Have Needs" Parry has picked up Gruenhagen's baseless talking point and taken it on a royal pilgrimage across Southern Minnesota.

There's also a wonderfully scrambled sports metaphor, in which Parry says the ball is in Dayton's court, while also being placed on the fifty-yard line by Brodkorb's caucus. If the needy state senator figures out what the game is, perhaps someone will let the governor know.

His visitation with the citizenry of Spamtown is commemorated in GOP’s Parry: Dayton’s move, as well as with a marvelous photo that begs for 'shopping by the Divine Tild. We learn that Parry won't raise taxes on the wealthy:

Parry said the conservative majority was not willing to compromise to the point of raising taxes for the top two percent of earners in the state, particularly because that tax strategy has backfired in other states.

“What the governor wants is a 2 percent increase on the highest wage earners,” Parry said. “Maryland raised taxes on the upper income earners in 2008, and they had a 30 percent decrease in their tax returns in that bracket.

“The wealthiest can move their money wherever they want to.”

Since the Republicans have decided that recycling talking points, regardless how debunked, is the game plan (whatever the game may be), Bluestem will go back to the debunking cited in the May post.

Over at BlueOregon, Executive director of the Oregon Center for Public Policy Chuck Sheketoff noted in Facts Go Missing: The Unsubstantiated Tale of the Fleeing Maryland Millionaire:

. . .Instead of circulating stories founded on supposition, the Senate Republican Office would do better to distribute the analysis by the Institute on Taxation and Economic Policy (ITEP),Where Have All of Maryland’s Millionaires Gone? Nowhere – They’re Probably Just Not Millionaires Anymore. (PDF).

ITEP examined the preliminary tax return data released by the Maryland comptroller — who acknowledged that not all the data is in yet, particularly for high-income earners — and found that the data fail to support the Wall Street Journal’s claim:

[A]s a result of legislation enacted in 2007 and in 2008, income tax rates for affluent Marylanders were higher this past year, not just for residents with taxable incomes over $1 million, but for individuals with taxable incomes above $150,000 and for families with incomes over $200,000. Consequently, if it is the case that wealthier taxpayers respond to changes in income tax liability by changing their state of residence, one would expect to see that response not just for taxpayers with incomes above $1 million, but, to some degree, among all affected taxpayers. The Comptroller’s preliminary data suggest that this is not the case.

With the exception of “millionaires”, the number of returns in the affected ranges of taxable income appears to have grown between 2007 and 2008. Given recent economic events – and, in particular, the widely-anticipated decline in income from capital gains, which are received almost exclusively by the very wealthiest residents of each state – a far more likely explanation for the alleged disappearance of Maryland’s millionaires is that, for 2008 at least, they are no longer millionaires. Instead, their incomes may now fall in lower ranges of the distribution, thus potentially accounting for some portion of the increase in the number of returns in those ranges.

In other words, analysis of the preliminary data from Maryland fails to support the assertion that a tax increase on the wealthy will cause them to flee.

And that's just Maryland; Sheketoff takes a look at claims about tax refugees from other states Parry doesn't specifically mention, deftly dismissing them.

Over at Across the Great Divide, Charlie Quimby suggest that you Don't Look to Rich or Business for Salvation. He writes:

For years, Growth & Justice has been looking for and failing to find strong evidence that Minnesota is losing jobs, wealthy residents and businesses due to corporate and personal income tax rates.

Just last month, the Council on State Taxation, an association made up largely of corporate tax attorneys, released a study [PDF] by Ernst and Young that says differences in tax rates are not a main factor influencing businesses to build or hire in one state over another — and that Minnesota ranks 10th best in terms of the competitiveness of our investment tax climate.

Despite this — and absent more than anecdotal evidence of business flight — political figures, business executives and their hired guns always come back with the same line: Higher state tax rates kill jobs and drive job creators and wealth out of Minnesota. . . .

Check out his analysis of the business version of Parry's broader claim, while Bluestem waits for Parry to settle on a single unified sports analogy.

Bleg: Like what you're reading? Throw a few coins in Bluestem's tip jar for the blog's June reader support drive. Need more information? Read all about it here.

Photo: Scary Parry trying to get a grip on something. Photo by Matt Peterson at the Austin Herald.

Related post: Glenn gone wild: Gruenhagen's baseless talking point about tax refugees fleeing OR & MD.

Guest post: Minnesota needs a fair economy where the richest pay their fair share

Guest commentary

by Terry VanDerPol

My name is Terry VanDerPol. I farm in the western part of the state in the Minnesota River Valley outside of Granite Falls. I raise cattle and I’m a member of Land Stewardship Project.

I am here to say that we can have a society that provides healthcare for all, quality education for all, healthy land, clean water, nutritious food for all. We can have profitable family farms and robust rural communities and cities. But we’ll never get there if the corporations, the HMOs and the rich don’t pay their fair share.

Family farmers are less likely to have health insurance coverage than most Minnesotans and when they can get it, they pay a lot more for it. Why? Because HMOs care a hell of a lot more about profits than they do about people. They are holding a half of a billion dollars in excess reserves that we need to claw back into the state treasury. It’s our money. The money is there; let’s use it for care!

I come from a part of the state that remembers the robber barons of the 19th and 20th centuries, the banks, railroads, grain traders and oil companies who picked the winners and losers and amassed huge personal fortunes on the backs of Minnesotans.

I come from a part of the state that remembers farmers and laborers uniting to take down the barons and build this state into a place that invests in people and communities. I graduated from a school in a small, rural town with an education that was the same high quality as any kid got in the wealthiest district in the state. That school district now operates on a four-day-a-week schedule.

I come from a part of the state that knows that that when we invest in our workers, invest in our schools, invest in our health programs, invest in our transportation systems and invest in our environment, that everyone benefits and that everyone should pay their fair share.

I come from a part of the state that knows that way forward is to organize, to stand together to take back our power from the big banks, the HMOs, and the food & agribusiness giants that are pillaging our state and tell the richest 2% to pay their share to avoid deep cuts that kill jobs and will hurt all of us.

But now, the corporations and the rich pay a smaller part of their income in taxes than you and I do and they want to pay even less! They want to defund everything that makes this a great state, and leave us begging for low paying, no benefit, dead-end jobs! Enough is enough! I’m here with you today to collect on a bill that’s way past due! Big banks, big retailers, big agribiz, it’s time to pay up!

Terry VanDerPol is a western Minnesota cattle farmer and member of Land Stewardship Project. This speech was given in the Minnesota State Capitol Rotunda on May 21, 2011 at the Rally for A Fair Economy. This post first appeared on Take Action MN's blog and appear here with permission.

Photo: Western Minnesota beef farmer Terry VanDerPol leads a Farm Beginnings field day on soil monitoring. via LSP.

What did Torrey Westrom think he was saving with private prison proposal?

Representative Torrey Westrom has been pushing bills for using private prisons for years--witness this 2009 press release that cites research by an ideological think tank --as a cost-saving measure. As the Star Tribune reported back in March in Push for private prisons draws fire, he's been at it again this year.

Today's New York Times reports that contracts with private prisons may not actually save public dollars but simply cheery-pick inmates who are less expensive to care for.

In Private Prisons Found to Offer Little in Savings, the NYTimes' Richard Oppel Jr reports:

The conviction that private prisons save money helped drive more than 30 states to turn to them for housing inmates. But Arizona shows that popular wisdom might be wrong: Data there suggest that privately operated prisons can cost more to operate than state-run prisons — even though they often steer clear of the sickest, costliest inmates.

The state’s experience has particular relevance now, as many politicians have promised to ease budget problems by trimming state agencies. Florida and Ohio are planning major shifts toward private prisons, and Arizona is expected to sign deals doubling its private-inmate population.

The measures would be a shot in the arm for an industry that has struggled, in some places, to fill prison beds as the number of inmates nationwide has leveled off. But hopes of big taxpayer benefits might end in disappointment, independent experts say.

“There’s a perception that the private sector is always going to do it more efficiently and less costly,” said Russ Van Vleet, a former co-director of the University of Utah Criminal Justice Center. “But there really isn’t much out there that says that’s correct.”

Such has been the case lately in Arizona. Despite a state law stipulating that private prisons must create “cost savings,” the state’s own data indicate that inmates in private prisons can cost as much as $1,600 more per year, while many cost about the same as they do in state-run prisons.

The research, by the Arizona Department of Corrections, also reveals a murky aspect of private prisons that helps them appear less expensive: They often house only relatively healthy inmates.

Go read the whole article; it's worth it.

Though no specific company or facility is mentioned in Westrom's bill, the only private prison in Minnesota is the now-shuttered Prairie Correctional Facility in Appleton, owned by Corrections Corporation of America. The company is known for its aggressive drafting and lobbying of bills to build its business.

In the Strib coverage of the bill, Kevin Giles reported:

Westrom said it makes sense to use the Appleton prison rather than let it sit empty.

This is curious. Why should the fact that the prison is empty be reason in and of itself to fill it?  It's not empty at government expense; that's a privately owned facility. Perhaps Westrom's hollow reasoning helps underscore the problems with treating prisoners or detainees like any other commodity to be traded in a market. A government mandated market for human bodies? May not be the best illustration of a free market at work.

AFSCME has more at Private Prison Savings Are a Hoax

Photo: The CCA facility in Appleton, via Minnesota Public Radio.

Republicans planning to tax some clothing, raise income tax on some rich people

Minnesota Republicans keep assuring us that they won't raise taxes. Any tax. Those pesky property taxes that might go up as the state retreats from LGA, kicks prisoners into local jails, and passes on other government functions? Meh, the logic goes, local governments can just "spend differently," rather than seek additional revenue.

Indeed, headlines earlier this week noted that GOP legislative leaders plan fly-around to promote 'no-tax increase' stand. When a late snowstorm made flying risky, they prudently postponed the trip until next week, but it will happen.

But there's a Republican bill in the hopper that would tax some clothing and high wage earners.

The Star Tribune reports in T-shirts could aid Vikings' stadium bid:

That Vikings jersey, Twins cap or Wild poster on the sales rack could play a bigger role than you think in helping to pay for a new Vikings stadium.

A 10 percent tax on wholesale sales of sports memorabilia -- including anything sold in Minnesota licensed by any pro sports team or league, not just the NFL -- would provide most of the state funding share called for in a stadium bill, according to a study by the Revenue Department. . . .

That would be followed by:

• $7.8 million from a 5 percent surcharge on the income that Vikings players and their opponents make when playing in the new stadium . . .

• $1.39 million from a 6.5 percent sales tax on direct satellite TV services, including DVR; . .. .

The memorabilia tax would be collected not just on items licensed by NFL football, but also the International Federation of Association Football and the Football Association. Not to mention Major League Baseball, the NHL, the NBA, NASCAR, Major League Soccer and World Wrestling Entertainment.

The 5 percent income tax surcharge would apply to any sports team employee who makes at least $250,000 a year. Most of those would be players, but some Vikings executives and their opposite numbers on other teams could be taxed as well for stadium work time.

This is curious logic from the no-new-taxes crowd. Apparently, it's okay to go to high-income people working in an industry which gains from a structure to be built with public assistance, and tax clothing that is licensed by an entire ndustry.

And even that last one is a stretch, since it lumps WWE into "sports" when the company itself thinks of itself as entertainment. Moreover, NASCAR will never be a stadium sport, regardless of how many left turns those athletic drivers take. It's hard to see why WWE and NASCAR fans should pay a tax on their t-shirts in a state where clothing isn't taxed.

Moreover, the added surcharge on high-income earners in the football industry seems hypocritical coming from members of a political party that objects to surcharges on income taxes for other high wage earners working in any other industry. 

The logic behind the surcharge is no different from that advanced by progressives who advocate a surcharge on all high-income earners during times when more revenue is needed: to those to whom much is given, much will be demanded.

On the other hand, perhaps this model can be adopted for funding government needs that benefit other industries. Senator stadium author Julie Rosen's ex-husband makes a great deal of money in the meat-packing industry, as do executives who work for Hormel and Cargill. Let's slap a personal income tax surcharge on their salaries to fund the Minnesota Department of Agriculture. Ditto with the health care and health insurance industry. The revenue on high-earners could be dedicated to the state HHS.

Drawn a big check from a firm that builds roads? Income tax surcharge for construction company CEOs.

Why should pro-football players and executives who need a stadium be singled out for this class warfare? Why should sports fans alone have to pay sales tax on t-shirts?

How are new taxes not new taxes? Why is the logic of these new taxes acceptable only for a stadium--and not for other spending by the State of Minnesota? If Tony Sutton and his party object to new taxes--especially for what they call "wants" rather than "needs--how are these new taxes,including an income tax surcharge targeting "the rich," suddenly okay to solving a revenue shortfall?

Sutton wrote earlier this year:

"Please resist any “revenue enhancement” proposals like raising taxes, raising fees, expanding gambling, expanding the sales tax, or any other such schemes that not only violate our principles, but are also bad politics and bad public policy," Sutton wrote in a Feb. 14 letter to legislators.

"The challenge will be to overcome and resist the tremendous pressure by outside special interests who will want you to compromise on the principles that got you elected in order to “find revenue” (i.e. raise taxes, raise fees, expand gambling, etc.) to “invest” in big government," he wrote. "You cannot espouse limited government on one hand, while looking to find new sources of revenue on the other."

Why is this "want" a special exception to Republican principles, and not other "wants" (and even "needs" like incarcerating short-term prisoners in state corrections institutions)? What makes this "investment" different from those in higher education?

Ilustration: The proposed Vikes stadium. None dare call it class warfare if the income tax surcharge is on a defense line.

Greater Minnesota newspapers scold Republican legislature for shifts, gimmicks and raids

Governor Dayton wasn't alone yesterday in calling out legislative Republicans for "shifts, gimmicks and raids" as they seek to balance the budget without admitting a need to increase revenue.

Earlier, the editorial board of the New Ulm Journal, which leans to the right, called them out in Taking money that’s not their own? over a plan to swipe local sales tax money:

Republicans in the Minnesota Legislature are bound and determined that they are not going to raise taxes to balance the state's $5 billion budget deficit.

But apparently they are not averse to taking someone else's tax revenue.

A major transportation funding bill that is makings its way through the GOP-controlled Legislature seems to transfer $69 million in sales tax revenue raised by five metro counties for rail and bus rapid transit to replace some $51 million the state would cut from general fund spending on bus operations.

Now hold on here. This is a sales tax revenue levied in Hennepin, Ramsey, Dakota, Washington and Dakota counties. The money, approved by the county boards in those counties, has been going to the Metropolitan Council for future light rail projects like the Southwest Corridor project.

Since when does the state have the power to grab revenue from other sources of government?

New Ulm levies a half-percent sales tax to pay off the bonds that built the New Ulm Civic Center and several other park and rec facilities expansions. If the state can divert money from the metro counties' sales tax, what's to stop them from diverting our sales tax revenue, too?

Apparently the philosophy of "living within our means" that state Republicans espouse really does mean "our" means, as in your's as well as mine.

I gather those planning this pilfering met with a wall of similar criticism; the Strib reported Republicans on House panel back off transit money fight. However, the article notes it's not over until it's over:

The decision clears the way for the spending bill to reach the House floor next week -- where the issue could surface again.

DFLers had lambasted the diversion of sales tax money that five Twin Cities counties have collected to expand metro mass transit.

Rep. Mindy Greiling, DFL-Roseville, said the provision was "amazingly insulting to our local taxpayers." Rep. Frank Hornstein, DFL-Minneapolis, added, "This is raiding money that the five counties have raised," and said it set a precedent for the state to tap other local tax money to shore up its budget.

The Albert Lea Herald editorialized about a cut in health care spending in Budget plans beat hopes:

. . .The charitable interpretation of the House Republican budget is that it’s a case of hope trumping reality, as opposed to intentional smoke and mirrors. But either way, counting on a waiver from a federal government whose boss, the president, seems committed to health care benefits for the poor and elderly, strikes us as unlikely to bear fruit.

We’ve noted several times this winter that those in control at the Capitol seem unable to put forth a useful plan for erasing the state’s budget deficit. It is, however, still not too late — and Minnesotans must hope that lawmakers have some ideas that are less fanciful and more likely to produce results.

The Republican Party of Minnesota likes to claim it's the party of rural values, but it's not looking like Greater Minnesota feels it's getting value for that premise.

Photo: What are the values of the party led by failed burrito baron Tony Sutton?

More math problems: pension bill Parry pitched "threatens stability of state’s retirement system"

Something isn't adding up for the Republican majority in the Minnesota Senate. The latest wrong answer: a bill that will threaten the stability of Minnesota's pension funds.

I'm hard pressed to tell whether the error in the proofs is located in the calculation that Senator Mike Parry is prime leadership material, or that the STEM initiative needs to be applied retroactively to freshman legislators like Gretchen Hoffman. It's a false choice; both are likely true.

Last week, the Minnesota Senate Majority comm shop--leader by MNGOP deputy chair Michael Brodkorb chivalrously trotted out Sen. Mike Parry to assist Senator Hoffman in the press conference promoting a bill to cut the state contribution to the public employees' pension, while raising their contribution.(Parry isn't exactly carrying any important bills on his ownsome).

Later in a town hall, Parry defended the bill to constitutents who work for the state, as Bluestem noted in Mike Parry tells public employees they'll get bigger pensions, suggests new tax on services:

At one point, Parry characterized the pension bill as an increase.

“Why wouldn’t you want an extra 3 percent in your pension for when you retire?” Parry said.

“I’m not getting an extra 3 percent. I’m getting to pay an extra 3 percent because you’re reducing my employer’s contribution to it,” Driskell said. “And you are cutting me, sir. You’re cutting 15 percent of my co-workers, which may well be me, and you’re cutting 6 percent of my salary. You are cutting me. Don’t tell me you’re not. I have a brain.”

In their rush to demonize (and cut take-home pay for state employees), Hoffman and Parry forgot to check their math on the pension fund itself. A press release from Senator Dick Cohen's office lays out of the case:

“Republicans have pushed their plan to cut public employee pensions under the veil of fiscal responsibility, but now it’s clear this is simply an attack on hard-working public employees,” said Sen. Dick Cohen, DFL-St. Paul. “This bill will add costs to state and lower governments, lower tax revenues for our state, and increase the unfunded liabilities in our retirement system. Worse, it will take money out of the pockets of working families during these difficult economic times.” . . .

. . .Experts at the Minnesota’s three major pension plans – the Minnesota State Retirement System, the Public Employees Retirement Association and the Teachers Retirement Association – testified that while Minnesota’s pension system is currently well-managed, the GOP proposal would add significant costs to the system, and expand the deficits in Minnesota’s retirement funds.

 

As introduced, the bill would have expanded the unfunded liabilities in the state’s retirement funds by $64 million. An amendment adopted to the proposal last night would reduce that figure to roughly $40 million.

 

“This so-called pension reform bill threatens the very stability of our state’s retirement system,” said Sen. Cohen. “At the end of the day, this bill is simply a cost increase on thousands of middle-class Minnesotans. It will bring in $30 or $40 million for our state’s General Fund, directly out of the paychecks of public workers. It is simply a pay cut disguised as reform.”

 

The measure was also opposed by city and county officials, nurses, firefighters, school districts, teachers, and state employee unions. Rep. Steve Smith, R-Mound, a House Republican lead on pension issues, has also questioned the merits of the proposal.

 

The State Government Innovation and Veterans Committee will consider whether to include the measure in a broader budget bill late Tuesday evening.

And the genius heading that committee? Mr. Personality himself, Senator Mike Parry.

Photo: Senator Mike Parry, real man of Republican genius.

Playing politics with pain: Glenn Gruenhagen blames Hutch Tech lay-off on taxes

Update 3/16: While Minnesota Republicans carried on about how HTI's relocation of jobs could have been motivated by a two-year tax credit for businesses relocating to Wisconsin, that's probably not a motivating factor. According to this business source:

"No deduction or credit will be allowed if the person, partnership, limited liability company, or S Corporation has done business in Wisconsin during any of the two taxable years preceding the first taxable year in which the deduction or credit would otherwise be allowed." Since HTI's Eau Claire (above photo) has been open and operating for some time, this MNGOP talking point is clearly nonsense. [end update].

I live in Hutchinson, Minnesota, and so have followed the fortunes of a local company that manufactures suspension drives for computers. Put bluntly, the company's fading from the local scene mostly has to do with shifts in demand for the product, created by changing computer technology, as well as shifts in manufacturing offshore.

That hasn't eased the pain of the people I know who worked there--mostly parents of young friends around college age--who have been laid-off in the last few years from the non-union plant. Fortunately, most have been able to go back to school and switch careers.

Today's Star Tribune reports in Hutchinson Technology laying off hundreds:

Far fewer people will be working for Hutchinson Technology due to the Minnesota company's plan to restructure and move its components operations from Minnesota to its facility in Eau Claire, Wis., and overseas.

Hutchinson, based in its namesake city west of the Twin Cities, said Tuesday that it will cut its current U.S. workforce of about 2,275 by 30 to 40 percent. In Hutchinson, about 600 of the 1,125 jobs will be eliminated.

Leave it to Minnesota's Republicans to seize on a local small town's misery to tout Wisconsin, run by divisive fringe Governor Scott Walker, over Minnesota. My favorite new state House member, Glenn Gruenhagen wrote in an email that went out today:

This is how a stable, low-tax and pro-growth business climate at the federal level can generate revenue for Minnesota. But there is still vast room for improvement at the state level and we continue losing jobs to neighboring states. We recently learned a prominent Hutchinson company will shift its manufacturing operations to Wisconsin at a savings of $45 to $60 million annually. Our tax climate remains among the most unfriendly in the country and Gov. Dayton’s plans to raise taxes would put us at a further disadvantage.

You reach a point of diminishing returns when tax increases push our job creators out of the state, cutting off revenue streams we need for sustainability and a strong economy. Our neighbors – including Wisconsin – recognize this and declare themselves “open for business” instead of strangling the goose that lays our golden eggs.

Is Minnesota's tax climate the reason to blame for HTI's shift in production? Or is Gruenhagen simply demogoguing the pain that workers will be feeling in nearby Hutchinson (Gruenhagen lives in Sibley County, but sells insurance in McLeod County's seat, Glencoe).

A curious closing in South Dakota

Posted on the company's website, the press release announcing the restructuring notes:

Fortun said that improvements in TSA+ yield and output and being ahead of plan with the ramp of its assembly operation in Thailand have provided an opportunity to further lower the company's operating costs. "With a faster than expected transition from our legacy TSA component manufacturing process to our more automated TSA+ process, we need fewer employees to meet customers' volume requirements," said Fortun. "Additionally, progress at our Thailand assembly operation is enabling us to accelerate the transition of assembly manufacturing to that location. The continued transition of TSA to TSA+ and the continued ramp of our Thailand operation, combined with the savings from our consolidation and restructuring, will improve the utilization of our high-volume manufacturing locations and support infrastructure and help us return to positive cash flow and profitability sooner."

And where are those TSA+ components made? The Hutchinson Leader reports in Hutchinson Technology to end manufacturing in Hutchinson:

The decision to consolidate manufacturing in Eau Claire was made because the plant there is better equipped and has the capacity for the production of TSA+, the company's newest line of suspension assemblies.

TSA+ suspension assemblies, which accounted for about 45 percent of the company's fiscal 2011 first quarter shipments, are expected to account for more than half of the company's fiscal 2011 second quarter shipments and two-thirds of its shipments by year end.

Fortun said improvements in TSA+ yield and output and being ahead of plan with the ramp of its assembly operation in Thailand have provided an opportunity to further lower the company's operating costs.

"With a faster than expected transition from our legacy TSA component manufacturing process to our more automated TSA+ process, we need fewer employees to meet customers' volume requirements," Fortun said.

In 2009, the company announced it was resuming plans to build a plant in Thailand, according to news reports in July 2009:

HTI shipped 146 million suspension assemblies in the quarter and about 10 million TSA+ suspension assemblies, a next-generation product made in Eau Claire.

Company officials said sales of TSA+ suspension assemblies have the potential to double in the fourth quarter. HTI also resumed plans to establish an assembly operation in Thailand, which could be operational by the second half of next year.

In April 2009, the local paper in Eau Claire reported:

"Our TSA+ manufacturing processes are critical to providing next-generation suspension assembly products that meet customers' requirements for superior performance and lower costs,"  Pautz added. "High-volume TSA+ production is done in Eau Claire. That team is doing a great job in meeting increased demand, while at the same time continually improving the process.

In 2009, Democrat Jim Doyle was in his second term as governor; Democrats had taken control of the State Assembly with the 2008 elections, while retaining control of the State Senate. Under Republican logic, one would think that Hutch Tech jobs would have flowed to South Dakota. 

And indeed, Hutch Tech did open a plant in South Dakota in 1988, and company co-founder Jeff Green made waves at the time by criticizing Minnesota's business climate. Employment peaked at that plant in 1999, but declined after that time ( Rob Swenson, "Hutchinson Plays Smaller, Vital Role", Argus Leader, September 17, 2008, Nexis, accessed 3/8/2011).

But Hutch Tech closed that Sioux Falls plant in January 2009. 

It moved equipment and a few hundred jobs to Hutchinson and Eau Claire.

There's nothing in the current reportage to suggest that taxation is causing the consolidation to Eau Claire, nor the placement of the TSA+ lines in Wisconsin during the Doyle years.

And this company's leadership isn't shy. Were today's decision made because of the sudden shift in Republican talking point about business climates in Wisconson and Minnesota, we'd have head about it. Instead, the restructuring follows siting decisions made some time ago.

Offshoring of manufacturing

And then there's the shift to offshore manufacturing. In a related blog post at the Strib, business writer Eric Wieffering writes in Hutch Tech: Too little, too late?:

To some degree, the people of Hutchinson have been bracing for this moment ever since their namesake company's fortunes took a dramatic turn for the worse almost three years ago. The company has shed about 2,000 jobs since then. Still, the impact of the latest cuts is hard to overstate: the elimination of up to 40 percent of all jobs, including nearly half in Hutchinson.)

(One measure of how depressingly familiar this type of news has become for Hutch Tech: The quote that accompanied today's news is, word-for-word, the same as the one the company issued in '09, when it shut its South Dakota facility and laid off 300 employees. The only difference was the executive whose mouth the words were attached to.) [BSP: and the state in which the plant was located]

A year ago, Hutch announced plans to build its first overseas production facility, in Thailand. The company is banking on that facility to help claw its way back to profitability, but given that many of its competitors moved manufacturing to Asia a decade ago or more, did Hutch wait too long?

Details, details. Why would Glenn Gruenhagen look at facts when he can use his neighbors' misery to flog Governor Dayton?  Why let facilities and global trends get to the way of a chance to punish a DFLer?

Images: Hutch Tech, Eau Claire (above); Screenshot of Representative Glenn Gruenhagen's email (below)

Spinside the Senate: Chamberlain connects Medtronic lay-offs to high taxes

In an interview on today's  Republican Senate Majority Caucus's "Inside the Senate" broadcast, hosted by Waseca senator Mike Parry, freshman senator Roger Chamberlain repeats the Republican mantra that Minnesota's rate of taxation will drive business to relocate. Chamberlain serves on the Senate Taxes Committee.

No news there, nor that of the studies that argue otherwise.

The most fascinating point where Chamberlainplugs a round talking point into a square hole is his mention--twice--of recent lay-offs by Medtronic.

At 11:40, Chamberlain says:

I agree with 3M, enough is enough. they have to be able to compete on a global basis and if they can't, they'll either move their headquarters, expand other places, or eventually they'll go out of business. Honeywell left, others will leave. Medtronic laid off people...

Problem: there's nothing in news reports to suggest that the Medtronic lay-offs were caused by high taxes.

On February 22, MPR's Martin Moylan reported in Medtronic plans huge job cuts, impact in Minn. unknown:

Medtronic, the world's largest medical device maker, plans to eliminate up to 2,000 jobs company-wide. The cuts are part of a restructuring effort to make up for disappointing sales of its implants.

The Fridley-based company said Tuesday the downsizing will involve both layoffs and not replacing workers who depart or retire. The cuts are aimed at achieving "long-term sustainable growth" and will reduce its 41,000-person work force by 4 to 5 percent. . . .

The layoffs announcement came as Medtronic reported net income of $924 million for the three months that ended Jan. 28, beating Wall Street expectations. Sales rose about 3 percent to nearly $4 billion....

Those sluggish sales are caused in part by consumer choice when faced with having to pay a greater share of medical costs, competition with the industry and pressure from insurance companies to lower costs:

Patients are paying an increasing share of their health care costs, causing people to delay optional procedures requiring expensive devices, Wald said.

"Even defibrillators, even pacemakers, especially spine products, the neurology products ... they can all kind of be postponed because they're not life threatening," he said. "So, if you look at it kind of that way, there's a number of products and product lines at Medtronic that are susceptible."

And Wald said Medtronic also faces intensifying competition from rivals, as well as pressure from insurers determined to cut reimbursements for medical devices.

(An aside: one standard conservative argument for health savings accounts is that consumer choice will make people more aware of health care costs and so drive down costs; reduced demand for Medtronic's products is certainly illustrative of this notion of consumer-driven health care).

And taxes? The Star Tribune's report, With growth starved, Medtronic is cutting jobs, links taxes with the company's increased earnings:

Overall sales for the quarter ended Jan. 28 declined 3 percent, to about $4 billion. Earnings were $924 million, or 86 cents a share, compared with $831 million, or 75 cents a share, the same period last year.

Analysts were expecting the company to earn 84 cents a share. Leerink Swann analyst Rick Wise wrote in a note to investors on Tuesday that although Medtronic beat Wall Street expectations by a few pennies, that performance "was driven almost wholly by a much lower-than-expected tax rate."

No word whether those taxes were state or federal, but it's not high taxes directly causing the lay-offs. Lower taxes contributed to higher earnings, but the lay-offs occurred because of disappointing sales.

Nor have, so far as I can tell, representatives from Medtronic appeared before the committee on which Chamberlain sits.

Photo: State Senator Roger Chamberlain, R-Lino-Lakes.

Related posts:

Spinside the Senate: Senate Republican Majority Caucus produces Radio Free Mike Parry

Spinside the Senate: send GOP Senate Majority Caucus comm shop your questions

 

Chamber vs. Chamber?: Mayors on LGA and Greater Minnesota

In a column presumably distributed by the Coalition of Greater Minnesota Cities (CGMC), the mayors of Albert Lea and Bemidji weigh in on why LGA is critical to Greater Minnesota businesses (via the Worthington Globe).

There is an interesting divide emerging between the Minnesota Chamber of Commerce and some local chambers. Recently, the state chamber publicly took local chambers in Greater Minnesota to task for signing, or even considering signing, a resolution supporting the Local Government Aid (LGA) program.

That was a hard blow to businesses and chambers whose economies are on the line. They understand that the LGA program is critical not only to their businesses and to the economy of Greater Minnesota, but to the economic health of the state as a whole. They disagree with David Olson, president of the state chamber, who said local chambers that support LGA are simply protecting the status quo.

Unfortunately, the status quo over the past few years has been a history of LGA cuts leading to higher property taxes and reduced services for businesses and homeowners in Greater Minnesota and the inner city, while those located in high property wealth cities, particularly in the suburbs, have remained unscathed. If LGA is cut, these inequalities would accelerate, making businesses in greater Minnesota even less competitive with those in property rich cities or in other states, and that is not acceptable.

The state chamber says that when it comes to weathering the current economic storm, everything should be on the table. But as the mayors of cities that have had to struggle with balancing the level of property taxes with the service needs of our businesses and community, we see nothing but the status quo in what they are asking. When it comes to raising revenue, property taxes are always on the table while other revenue sources appear to be untouchable, and when it comes to cuts, some aid programs, like LGA, are front and foremost while others are ignored.

The Coalition of Greater Minnesota Cities (CGMC), of which our cities are members, has also been chastised by the state chamber. They say that we oppose change, but what we really oppose is their targeting of the businesses and communities with the fewest resources and highest needs. It is time for them to take their own advice by actually putting everything on the table instead of serving us more of the same old LGA cold cuts as though it is something for which we should be thankful.

Truth be told, the LGA program has served the state well, keeping all areas of the state prosperous. That being said, we do not oppose changes in the program, but any reform proposal should be evaluated by two standards:

* Does the reformed program continue to address the original goals of the LGA program, which is to even out property taxes across the state?

* Do changes in the LGA and other property tax relief programs distribute property tax increases and service delivery reductions fairly across the state without expecting Greater Minnesota to carry more than their share of the burden?

So far, we haven’t seen any proposals, including the state chamber’s vague “reform” policies, that meet these criteria. What we have seen is that, in taking local chambers to task for their support of the LGA program, the Minnesota Chamber of Commerce discounts the fact that what helps large corporate headquarters does not necessarily benefit Main Street businesses or industries located in Greater Minnesota. It is time the chamber takes all businesses in the state, not just big business, into account when setting its policies.

Vern Rasmussen is the mayor of Albert Lea; Dave Larson is the mayor of Bemidji.

It's fascinating to watch the Republican majorities in both houses of the state legislature seek to cut or eliminate LGA. Because they're all for "rural values," except when their corporate overlords in the state chamber tell them not to be.

Photo: Historic view of downtown Bemidji.

Labor to legislature: "We are in a jobs crisis"

by Laura Askelin, President
Southeast Minnesota Area Labor Council

With the Legislative session in full swing, I joined hundreds of workers and stormed the state Capitol earlier today to make sure that Minnesota’s state lawmakers focus on maintaining and creating family sustaining jobs, while finding a fair way to solve the state’s revenue shortfall.

Minnesota AFL-CIO President Shar Knutson welcomed us to Working Families Day on the Hill and reminded us that we weren’t just representing union members, but we represented all middle class Minnesotans as we fought for the over 200,000 Minnesotans who are out of work.

It seemed appropriate that as workers stood at the Minnesota capitol to fight for workers, we also voiced our support for the workers in Wisconsin, where an estimated 30,000 people joined a massive protest against Gov. Scott Walker’s attempt to eliminate collective bargaining rights for state workers.

“We’re seeing the same kind of things in Minnesota,” Knutson said. “A fringe group of politicians is trying to make it hard for working people to make a living.”

The mere mention of Wisconsin Gov. Scott Walker's proposal to strip public employees of their collective bargaining rights drew loud boos from the crowd.

We cheered as President Knutson voiced Labor’s support for Gov. Dayton’s jobs and infrastructure bill that would create nearly 30,000 family-supporting jobs in Minnesota.

Some of the great speakers included Dayton’s Chief of Staff Tina Smith and Beth McCuskey, a teacher and member of Education Minnesota, who urged lawmakers to support Gov. Dayton's initiative to increase school funding in each of the next two year. A Working America member and a Laborer both brought tears to some as they shared their stories of being out of work and desperately needing jobs.

Mike Lindholt, MnDOT snow plow driver and AFSCME member, called out lawmakers who have been blaming public employees for the state's fiscal problems. He spoke about the need to solve the budget crisis in a fair and balanced way.

Lindholt’s statements brought on cheering and cries of “Tax the Rich” from the crowd--and a place in Workday Minnesota's coverage of the event, Capitol echoes with chants of ‘Jobs now!’:

Snowplow driver Mike Lindholt said he was dismayed by the way public service workers have been characterized by some lawmakers.

“I am not a beast,” he said. “I am your friend, your neighbor, your snowplow driver . . . We take pride in keeping Minnesota safe and keeping our roads clear.”

After the rally, we got to meet face to face with elected representatives. I was pleased to see many of the Southeast state Legislators take time out of their busy schedules to meet with us. 

To all the Bluestem Prairie readers out there, if you’ve never been to the capitol, I encourage you all to take a day to journey to the capitol to visit with your legislators. We are in a jobs crisis; we need our legislators to stay focused and create jobs. Stand up and make your voice heard.

A native of Wisconsin and an AFSCME member, guest writer Laura Askelin kicks ass for the working class in the vicinity of Rochester, Minnesota. When not chastising the overly comfortable or strengthening the position of working Americans, she enjoys snow, photography, and the companionship of her family.

Photos: Workers rally in the Minnesota Capitol rotunda (above); AFSCME member and snowplow driver Mike Lindholt pumps up the crowd while Minnesota AFL-CIO President Shar Knutson looks on (below). Photos by Laura Askelin. Used with permission; all rights reserved by Askelin. See more pictures in the album, 2011 Working Families Day at the Capitol.

Will Randy Demmer have the courage to join the "Let Them Eat Want Ads Caucus"?

Last week, Randy Demmer generated a flurry of publicity--and consternation among his Tea Party base in Southern Minnesota--by taking a pass on pledging to join Michele Bachmann's Tea Party Caucus if elected.

In the Washington Post's Plumline, Greg Sargent writes in  The "Let Them Eat Want Ads" Caucus:

Let's call it the "Let Them Eat Want Ads" Caucus -- those candidates and public officials who argue that unemployment benefits are problematic because they discourage people from seeking jobs.

And let's add another Republican to that caucus: Candidate Michele Rollins, who's running for Mike Castle's open House seat in Delaware.

Rollins, who's running in a contested race against green technology exec John Carney, was asked by a constituent if she would have voted to extend unemployment benefits. She suggested she wouldn't, claiming that "for someone who hasn't worked in two years" it's "pretty hard to get energized to go back and look for a job."

She added:

"I know this is a bad market and a very bad time. But you just cannot keep paying people, cannot keep taxing us to pay people to do nothing, because they will continue to do nothing for a very long time." . . .

. . .To be clear, this is not the official position of the GOP leadership, which says it favors extending unemployment benefits if the cost of them is offset elsewhere and doesn't add to the deficit.

And that's why we need a special caucus for those who do see benefits as problematic: The "Let Them Eat Want Ads" Caucus. Any takers?

Here's the perfect group for Randy Demmer to join--and establish his independence from the Washington Republican circle of insiders that has rallied to his cause via new campaign chair, Beltway super-lobbyist Vin Weber.

Demmer should be a charter member.

Last week the Hayfield Republican told the Mankato Free Press:

As for extending unemployment benefits, approved by the House but not the Senate, Demmer would be reluctant.

Unemployment checks serve as competition with private employers seeking to hire, Demmer said. He’s talked to business owners who want to add employees but have been turned down by those who choose to stick with their unemployment benefits.

“We have people not taking a job because they have unemployment,” he said.

For those who reach the end of their benefits, Demmer is confident a job will be found.

“People are resourceful,” he said. “When they’re put in a position to really go and find something, I think they will.”

Sounds like a perfect fit.